Seafood: Alaska’s Sustainable Bounty

When counting fish, Alaska is a world class producer. In fact, if it were a separate country, Alaska would place among the top dozen fishing nations in the world and rank as the sixth largest seafood exporter. Economic studies peg Alaska as producing about $4.5 billion in seafood annually (first wholesale value). More than sixty thousand workers harvest, process, manage, and market Alaska’s seafood with in-state net earnings and payroll of about $1.7 billion. That’s not counting indirect employment and multiplier effects, which create an additional eleven thousand jobs in Alaska.

It’s also not counting quality of life improvements for Alaskans in scores of coastal towns and villages. The commercial fishing fleet provides valuable backhaul for shippers and helps to increase the market for—thus lowering the price of—fuel, food, and other supplies. Local fleets support the banking, telecommunications, and fabrication industries. Tyson Fick, communications director for the Alaska Seafood Marketing Institute (ASMI), says he has been told by transportation industry reps that Alaska consumers would have to pay higher freight rates if ships and planes were not using their southbound leg to carry fish.

“Large parts of the state are unaware of how valuable and significant commercial fishing is,” says Gunnar Knapp, director of the Institute of Economic and Social Research at the University of Alaska Anchorage (ISER). Knapp has studied the Alaska commercial fishing industry for more than three decades.

“It’s an immensely large and valuable industry,” Fick says. “This sometimes gets missed by people who don’t live along the coast, either outside a fishing area or outside the industry itself.”

Quality Leader

Alaska dominates world production of sockeye salmon and Pacific halibut and is a major producer of other species such as Alaskan pollock, Pacific cod, king crab, and pink salmon. Alaska’s commercial catch includes a broad number of species: pollock and cod; all five species of Pacific salmon; halibut; rockfish; sablefish; king, opilio, and Dungeness crab; and several kinds of invertebrates, such as geoduck clams and sea cucumbers.

Globally, Alaska produces one to two percent of all seafood and 10 to 13 percent of the world’s salmon. Alaskan fishermen typically catch about 55 percent of the entire US seafood harvest by volume.

As Americans eat more and more fish produced on (mostly foreign) fish farms, Alaska-caught products enjoy a worldwide reputation for the highest quality and for coming from a sustainable wild fishery.

“There is a growing preference for wild fish and pristine environments and healthy fish runs,” says ASMI’s Fick. “That’s something that the rest of the world doesn’t have. It gives us a huge marketing advantage.”

Alaska-caught fish command a price premium over other fish, Fick says. Alaska crab and pollock, for instance, are priced higher than Russian-caught crab and pollock.

Consumer advocates have found mislabeling of fish in some markets, passing off farmed Atlantic salmon as wild Alaska fish. While troubling, the mislabeling is also a sign of the appeal of Alaska-caught wild salmon.

“I’m not too worried about it,” Fick says. “I’d rather be in a position where other people were trying to claim their fish was ours, rather than [the reverse]. It’s good to be on top.”

Toward a Rational Fishery

Alaska seafood’s reputation for purity and quality is no accident. It is the result of tough negotiations and hard choices—true any time that fish need to be apportioned among competing groups.

Take halibut caught in the Gulf of Alaska, for example. In the 1980s, the fishery was a frantic derby, open to anyone. For a couple of days, Gulf residents would take a break from their jobs as schoolteachers and shopkeepers to venture out among the professional fishermen. A guy in a skiff could make $1,000 or more per day—those on larger boats much more. With such a bounty at stake, fishermen would fish regardless of the weather. Then, nearly the entire halibut catch would hit the market at the same time—making it harder to process and market the fish.

Today, the Gulf’s halibut has been allocated to about 1,300 fishermen under an IFQ system (Individual Fishery Quota). Individual fishermen control a set amount of the overall quota, which they can harvest depending on market demands. The fish can be handled with the utmost care and fishermen can afford to sit out storms. With the higher quality has come a better reputation and high prices.

The industry’s commitment to first-rate handling and creative marketing bears a lot of the credit for Alaska’s successful fisheries. But ISER’s Knapp says the health of the fish stocks is paramount and that both state and federal managers are key to keeping stocks healthy.

“Some people say government is wasteful,” says Knapp. “[But] we can only protect the wild resource with an excellent and adequately-funded management system. For a healthy fishery you need government. So my advice is to keep investing in management, research, and enforcement.”

While Knapp says there are many healthy fisheries in the world, there is some overfishing in the waters off developing nations and on the high seas. “The governments are not strong enough to protect the stocks or no single government is in charge,” he says.

Pink Salmon Dreams

“If you’re talking about what’s been hot in the last ten years, seining [for pink and chum salmon] has probably been as good as anything,” says Andy Wink, a seafood analyst with McDowell Group, Alaska-based economic consultants.

Pink prices rose from 9 cents (a pound) in 2003 to more than 40 cents in 2013, Wink says, although the price this year has dropped slightly because of the record 2013 harvest.

It is typical in fisheries—as in other commodities—that as the supply increases, the price decreases. But in the early 2000s, salmon prices were low and the harvest poor (not just for pinks, but other species as well).

Prices crashed because a new product—farm-raised Atlantic salmon—flooded the market at prices the wild fishery could not match. Alaska chose to sit out the salmon farm boom and commit to the wild industry. Meanwhile, British Columbia, Norway, and Chile, among others, threw themselves into salmon farming.

As the market adjusted to the influx of farmed fish, Alaskans were not idle. Groups like ASMI pushed the superior quality and sustainability of wild fish. Former Senator Ted Stevens and Representative Don Young were also instrumental in securing grant funding, which was matched by industry dollars, serving to revitalize the salmon industry. Grant and loan programs and significant investment from the companies themselves helped the industry diversify into other products, such as frozen portions, salmon burgers, and even high-end pet snacks (made from chum salmon carcasses).

“You go back to 2002 and about 80 percent of pinks went in a can [with 20 percent used for frozen products],” says ASMI’s Fick. “Fast forward to 2013 and 2014: Now we’re freezing more than we’re canning.” The price for canned salmon has also been strong.

In 2004, says Fick, the ex-vessel value of pink salmon fishery for the entire state came in at $39 million. Last year, high prices and a record run combined to raise that figure to $285 million. The improving situation for pink salmon is also illustrated in permit prices. The average price of a Southeast seine permit has increased by 817 percent since 2003.

“In the last fifteen years the world finally came to recognize, industrially, the use of pink salmon,” says Tom Sunderland, Vice President of Marketing and Communications at Ocean Beauty Seafoods. Ocean Beauty operates six processing plants in Alaska, from Naknek to Petersburg.

“[Pink salmon] is an abundant, relatively mild-eating fish that is a good value for a good protein—and it’s reliable. The reliable nature is one reason why the world finally caught up to it,” he says. Sunderland is the chair of ASMI’s Retail Salmon Committee.

Give credit for some of the pinks’ reliability to the efforts of Alaska’s state-supported and private non-profit hatcheries. These facilities hatch eggs and rear juvenile fish that are then released into the wild to feed, mature, and hopefully return in two or more years to be caught by fishermen. These salmon are said to be “ranched” rather than farmed and are marketed as wild fish. This is apt considering that—on average—only three percent of hatchery-reared pink salmon return as adults, while the rest join the food chain.

“On average, hatcheries account for about 28 percent of Alaska’s salmon catch,” says ISER’s Knapp. The majority of pink salmon caught in Prince William Sound began their life in a hatchery, notes McDowell’s Wink.

Russian Roulette

To predict the demand for and price of fish in any given region, it may help to gauge the amount of political turmoil there. Russia closed its borders to all products from the United States in 2014—including Alaska seafood. This was in response to economic sanctions imposed on Russia by the West, after Russia’s incursion into Ukraine. Before the embargo, Ocean Beauty sold a lot of lower-priced pink salmon roe—called green roe—to Russians. Ukraine was another market for Ocean Beauty’s green roe. The Ukrainian border was wide open to the product, but the tanking of the Ukrainian hryvnia made the roe too expensive for many.

With salmon from the United States getting a nyet, Chile is selling more product to the Russians, says Wink. Norway was a big exporter of salmon to Russia, fish that may be looking for other markets, such as the United States.

Russia’s pollock fishery is as massive as Alaska’s. Pollock and cod make up nearly two-thirds of Alaska’s total catch by volume. Recently Russia received sustainability certification for the bulk of its pollock, which has allowed them to access more lucrative European markets.

Alaska crab prices continue to be impacted by illegally-caught Russian crab, Wink says. China has been a strong market for Dungeness crab. High-priced black cod sales have been strong in Japan, despite the sagging yen. China is a growing market for Alaska seafood, not only for the domestic market to consume, but for Chinese companies to process the fish further and export the value-added product to other countries.

Maximizing Benefits

Before farmed salmon, Alaska had a much bigger share of the global salmon market. Now Alaska has a smaller share, but the global market is much, much larger. More people in more places are eating more salmon, both farmed and wild.

Salmon farmers who want to increase their output can expand or build a new farm. But Alaska’s wild fisheries rise and fall with mostly natural rhythms—although helped by hatchery input.

“In my opinion, the seafood industry has the brightest future of any other major Alaska industry because it is based on a sustainable and unique resource,” says Wink, who was a labor analyst with the State of Alaska prior to joining McDowell Group. “There is a vast amount of untapped economic potential for Alaska.”

Currently, Wink says, non-residents account for a slightly larger share of fishing earnings and far more processing earnings than residents.

“That,” he says, “is a by-product of history and demographics. Remember, Alaska would need to add three cities the size of Fairbanks just to match the population of Dayton, Ohio. So, given the fact that 90 percent of our five-plus billion pound harvest comes from areas containing less than 10 percent of the state’s population, it is easy to see the need for additional labor. However, that can change over time, and if it does the industry’s impact in Alaska will become even larger even if we don’t catch any more fish.”

Despite the involvement of non-residents, “Seafood comes out well when compared to other resource industries in the amount of Alaskan participation,” says Wink. “It accounts for about 7 percent of the state’s resident earnings in private sector industries. That’s nearly as much as construction or transportation, and several times more than mineral and metal mining.”

ISER’s Knapp stresses that protecting the wild fisheries is paramount to ensure a strong future. Cutbacks to fisheries research, management, and enforcement could hinder industry growth. Knapp says fisheries “critically rely” on such agencies as the National Marine Fisheries Service and the Alaska Department of Fish and Game, adding: “The fishing industry needs to continually make its case to the state that ‘We’re here! We’re important!’”

Alaskan author and journalist Will Swagel writes from Sitka.

This first appeared in the February 2015 print edition of Alaska Business Monthly magazine.